EXHIBIT 10.8
LICENSE AGREEMENT
This License Agreement (this "Agreement") dated as of May 15, 2001 (the
"Effective Date"), is entered into by and between XXXXXXXX FOODS OF
DISTINCTION, INC., a Colorado Corporation ("Licensor") and SWISS AMERICAN
SAUSAGE CO., a division of Provena Foods Inc., a California corporation
("Licensee") under the following circumstances:
A. Licensee owns and operates a food manufacturing company.
B. Licensor owns and operates a food manufacturing company.
C. The parties have entered into that certain Manufacturing and
Packaging Agreement dated as of the date hereof (the "Manufacturing
Agreement") and in furtherance of that agreement, desire to enter into a
license agreement of certain equipment necessary to manufacture certain
products.
NOW, THEREFORE, the parties agree as follows:
1. Equipment. Licensor hereby licenses to Licensee, and Licensee
licenses from Licensor, on and subject to the terms and conditions hereinafter
set forth, the equipment listed on Exhibit A (the "Equipment").
2. Term. The term of this Agreement shall begin on the Effective Date
and shall end on the date Licensee exercises its right to purchase the
Equipment pursuant to Section 4.
3. Payment. Licensee shall pay to Licensor without deduction, set off,
prior notice or demand, as a license fee for the Equipment, a fee calculated
and payable as set forth in Exhibit B (the "License Fee"). Licensee shall be
responsible for transporting the Equipment from South San Francisco,
California and installing the Equipment at Licensee's premises including
compliance with all legal and contractual requirements applicable to Licensee.
Licensor will reimburse Licensee for transportation and installation costs
upon submission of invoices by Licensee with appropriate proof of expenditure,
not to exceed $252,000. However, Licensee may request Licensor's prior
written approval, which approval may be granted or withheld in Licensor's sole
discretion, for any amounts spent in excess of $252,000 in connection with the
transportation and installation of the Equipment.
4. Purchase Right and Obligation. Licensee shall have the right to
purchase the Equipment for $1.00 at any time (i) after payment of the License
Fee as shown on Exhibit B or (ii) if Licensor has not purchased products from
Licensee under the Manufacturing Agreement for six consecutive months. In
addition, Licensee shall have the right to purchase the Equipment at any time
for a purchase price equal to the then unpaid balance of the License Fee
divided by 1.13.
5. Use. The Equipment shall be used by Licensee in a careful and proper
manner and shall comply with and conform to all laws, ordinances, and
regulations relating to the possession, use or maintenance of the Equipment.
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6. Equipment Licensed "AS-IS". Licensee licenses the Equipment on an
"AS-IS" and "WHERE-IS" basis and no implied representations or warranties are
intended or made in connection with this Agreement. Licensee acknowledges
that it has had a reasonable opportunity to make and has made an independent
investigation of all aspects of the Equipment that Licensee deemed
appropriate.
7. Licensor's Inspection. Licensor shall at reasonable times upon
reasonable notice have the right to inspect the Equipment for purposes of
confirming Licensee's compliance with its obligations hereunder. Licensee
shall give Licensor immediate notice of any attachment or other judicial
process affecting any item of Equipment and shall, whenever requested by
Licensor, advise Licensor of the exact location of the Equipment.
8. Alterations. Licensee shall not make any material alterations,
additions, or improvements to the Equipment without the prior written consent
of Licensor, which shall not be unreasonably withheld. All additions and
improvements whatsoever of any kind or nature made to the Equipment shall be
paid for by Licensee and shall be deemed to become part of the Equipment, and
shall be surrendered on the expiration, or earlier termination, of this
Agreement.
9. Maintenance of Equipment. Licensee, at its own cost and expense,
shall keep the Equipment in good repair, condition, and working order
(ordinary wear and tear excepted) and shall furnish any and all parts,
mechanisms, and devices required to keep the Equipment in good repair,
condition and working order.
10. Risk of Loss and Damage. Licensee hereby assumes and shall bear the
entire risk of loss and damage to the Equipment from any and every cause
whatsoever. No loss or damage to the Equipment or any part thereof shall
impair any obligation of Licensee under this Agreement that shall continue in
full force and effect. In the event of loss or damage of any kind to any item
of Equipment, Licensee, at the option of Licensor shall, to the extent the
insurance proceeds under Section 11 permit:
(1) Place the Equipment in good repair, condition, and working
order; or
(2) Replace the Equipment with like equipment in good repair,
condition, and working order.
11. Insurance. For the term of this Agreement, Licensee, at its own
cost, shall keep the Equipment insured against all risks of loss or damage
from every cause whatsoever for not less than its full replacement value as
agreed to by Licensor; and shall carry liability and property damage insurance
covering the Equipment in the amounts and covering the risks typically insured
against. All said insurance shall be in the form and amounts and with
insurance companies approved by Licensor, and Licensor shall be a loss payee
on all property damage insurance policies. Licensee shall cause the
insurer(s) to furnish to Licensor a certificate evidencing the required
coverage. The policies shall provide that the insurer(s) shall not cancel the
insurance except for non-payment of premium on thirty (30) days' advance
written notice to Licensor. Licensee shall pay the premiums for the policies.
The proceeds of such insurance, at the option of Licensor, shall be applied
(a) toward the replacement, restoration, or repair of the Equipment or (b)
toward payment of the obligations of Licensee hereunder.
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12. Default. Each of the following events is deemed to be a default
hereunder:
a. Licensee fails to pay any license fee or other amount herein
provided within ten (10) days after the amount is due and payable.
b. Licensee fails to return the Equipment upon the termination of
this Agreement subject to the terms contained herein.
c. A material failure by Licensee to observe, keep, or perform any
other provision of this Agreement or the Manufacturing Agreement required to
be observed, kept, or performed by Licensee and fails to cure such default
within thirty (30) days after receipt of written notice of such default.
d. Licensee ceases to actively carry on its business.
13. Licensor's Remedies. In the event of Licensee's default as defined
in Section 12, in addition to any other rights and remedies which Licensor may
have in equity or in law, Licensor shall have the right to exercise any one or
more of the following remedies:
a. To declare the entire amount of accrued license fees and the
present value of the license fees to accrue over the unexpired portion of the
term of this Agreement immediately due and payable, with Licensor retaining
all rights to the Equipment. In that event, Licensee shall immediately pay to
Licensor such accrued license fees, the present value of such future license
fees, plus any costs and expenses suffered by Licensor by reason of Licensee's
default. The present value shall be determined using the Federal Reserve Bank
of San Francisco discount rate in effect as of the date of default.
b. To xxx for and recover all license fees, and other payments,
then accrued or thereafter accruing, with respect to the Equipment.
c. To repossess any or all items of Equipment. Any repossession
shall not constitute a termination of this Agreement as to any or all items of
Equipment unless Licensor expressly so notifies Licensee in writing.
d. To terminate this Agreement.
e. To pursue any other remedy available at law or in equity.
Notwithstanding anything contained in this Agreement to the contrary, whether
or not Licensee is in default, upon exercise by Licensee of a purchase right
under Section 4 and payment by Licensee to Licensor of the specified purchase
price, the Equipment shall become the property of Licensee and Licensor shall
have no right to repossess the Equipment.
14. Concurrent Remedies. No right or remedy herein conferred on or
reserved to Licensor is exclusive of any other right or remedy herein or by
law or equity provided or permitted; but each shall be cumulative of every
other right or remedy given hereunder or now or hereafter existing at law or
in equity or by statute or otherwise, and may be exercised partially,
concurrently, or separately.
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15. Bankruptcy. Neither this Agreement nor any interest therein is
assignable or transferable by operation of law. If any proceeding under the
Bankruptcy Act, as amended, is commenced by or against Licensee, or if
Licensee is adjudged insolvent, or if Licensee makes any assignment for the
benefit of its creditors, or if a writ of attachment or execution is levied on
any item or items of the Equipment and is not re-licensed or satisfied within
ten (10) days thereafter, or if a receiver is appointed in any proceeding or
action to which Licensee is a party with authority to take possession or
control of any item or items of the Equipment, Licensor shall and may exercise
any one or more of the remedies set forth in Section 13 above.
16. Prohibited Assignments. Without the prior written consent of the
other party (which shall be exercised in its sole and absolute discretion),
neither party shall (a) assign, transfer, pledge, mortgage, transfer,
hypothecate or otherwise dispose of this Agreement or any rights hereunder or
interest herein, the Equipment or any part thereof, or any interest therein or
(b) sublet or lend the Equipment or any part thereof, or permit the Equipment
or any part thereof to be used by anyone other than Licensee, employees of
Licensee or Licensor. Consent to any of the foregoing prohibited acts applies
only in the given instance and is not a consent to any subsequent like act by
Licensee or any other person.
17. Sale of Business. Notwithstanding Section 16, either party may
assign all of its rights under this Agreement and to the Equipment to a person
who acquires the business of the party to which this Agreement and the
Manufacturing Agreement relate, provided that there is a concurrent assignment
to the person of the party's rights under the Manufacturing Agreement,
provided that the person assumes and agrees to perform all obligations to the
other party under this Agreement and the Manufacturing Agreement and provided
that the other party consents to the assignment, which consent shall not be
unreasonably withheld.
18. Binding Agreement. Subject always to the foregoing, this Agreement
inures to the benefit of, and is binding on, the successors and assigns of the
parties hereto.
19. No Waiver. No covenant or condition of this Agreement can be
waived except by the written consent of Licensor. Failure of Licensor to
exercise any right or remedy shall not be a waiver of any obligation of
Licensee or right of Licensor, shall not be a modification of this Agreement
or of any of Licensee's obligations under this Agreement, and shall not
constitute a waiver of any other similar default that occurs later.
20. Entire Agreement. This Agreement constitutes the entire agreement
between Licensee and Licensor with respect to the subject matter contained
herein; and it shall not be amended, altered, or changed except by a written
agreement signed by the parties hereto.
21. Notices. All notices, requests, demands and other communications
under this Agreement shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the third day after mailing if mailed to the party to whom notice is to be
given, by first-class mail, registered or certified, or overnight delivery by
federal express or other guaranteed overnight delivery service postage
pre-paid, addressed as follows:
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To Licensee: Xxxxxxxx Foods of Distinction
00000 Xxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
To Licensor: Swiss American Sausage Co.
000 X'Xxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxx Arena, President
Either party may change such party's address for purposes of this Section
21 by giving the other party written notice of the new address in the manner
set forth above.
22. Arbitration.
a. Any controversy or claim arising out of or relating to this
Agreement or the making, performance or interpretation thereof shall be
settled by binding arbitration before JAMS/Endispute and judgment on the
arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy. Arbitration shall take place in San
Francisco, California.
b. If any arbitration or other proceeding is brought for the
enforcement of this Agreement or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the prevailing party shall be awarded attorneys' fees, expert
witness' fees, arbitration fees and any and all other costs incurred in that
action or proceeding, including post-judgment attorneys' fees and costs.
23. Governing Law. This Agreement shall be subject to and be governed
by the laws of the State of California.
IN WITNESS WHEREOF the parties hereto have executed this License
Agreement as of the date first written above.
LICENSOR: LICENSEE:
XXXXXXXX FOODS OF DISTINCTION, SWISS AMERICAN SAUSAGE CO.
a Colorado corporation a division of Provena Foods Inc., a
California corporation
By:/s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxx Arena
Xxxxxxx X. Xxxxxxxx, President Its: President
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EXHIBIT A
LICENSED EQUIPMENT
Equipment:
Meat Preparation
Xxxxxx Grinder
Screw Conveyors (2)
Xxxxxxx Machine
Paddle Mixer (2,000 lbs., 1,200 lbs. Product mix)
Vemeg Buckets (10)
Product Forming
Bridge Meatball Former (including meatball assembly)o
Affico Vemeg Bucket Lift Hoist
Connection Conveyor to fryer
Product Cooking
Heat and Control Fryer
Heat Exchanger
Heat and Control Fry Clean Oil Filter Systems (with Circulation pumps
Pre-Drum Oil Filter
Oil Storage Tanks (3)
MPO Oven #2021 (with control panels) including all Related infeed and exit
conveyors from oven system
Boiler for MPO Oven (makes steam for cooking)
Product Freezing:
Freezing Systems Spiral Freezer and Compressor and Related conveyors
(sized to freeze cool 160 F cooked)
Product to core temperature of approximately 25 in 45 minute dwell time)
with enclosure
Product Packaging:
Automatic bulk and dribble scale
Band Sealer with Date Coder
Cleantech Handwash Sanitizer System
EXHIBIT B
LICENSE FEES
The License Fee shall be payable as follows:
1. The License Fee shall be calculated and mutually agreed upon by
Licensor and Licensee prior to the commencement of production by Licensee of
the Products to be produced by Licensee for Licensor as described in the
Manufacturing Agreement. The License Fee shall be calculated by multiplying
the total installed cost of the Equipment (but in no event more than $400,000)
by a factor derived by amortizing the total installed cost over a 60 month
period at 5%. For example, if the parties agree that the total installed cost
equals $400,000, the License Fee would equal $452,910.
2. The License Fee shall be payable in monthly installments by no later
than the 10th day of each month, in an amount equal to the number of pounds of
product purchased by Licensor from Licensee pursuant to the Manufacturing
Agreement, during the previous month, multiplied by a fraction, the numerator
of which is the License Fee and the denominator of which is 9,250,000. For
example, if the License Fee is $452,910, the License Fees per pound will be
$452,910/9,250,000 = $0.04896, and if Licensor purchases 100,000 pounds of
products from Licensee during month X, the License Fee for such month would
be: 100,000 X $0.04896 = $4,896,000.
FIRST AMENDMENT TO
LICENSE AGREEMENT
This First Amendment to License Agreement (this "Amendment") dated as of
January 1, 2002 (the "Effective Date"), is entered into by and between
XXXXXXXX FOODS OF DISTINCTION, INC., a Colorado Corporation ("Licensor") and
SWISS AMERICAN SAUSAGE CO., a division of Provena Foods Inc., a California
corporation ("Licensee") under the following circumstances:
A. The parties have entered into that certain License Agreement dated
as of May 15, 2001 (the "License Agreement").
B. The parties now desire to amend the License Agreement as
hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. Amendment to Equipment List. Section 1 of the License Agreement
is hereby amended by replacing the equipment list attached to the License
Agreement as Exhibit A, with the revised list of Equipment attached hereto as
Exhibit AA.
2. Amendment to License Fee. Section 3 of the License Agreement is
amended in its entirety as follows:
3. Payment. Licensee shall pay to Licensor without deduction, set
off, prior notice or demand, as a license fee for the Equipment, a fee
calculated and payable as set forth in Exhibit B (the "License Fee")."
4. Entire Agreement. This Amendment, together with the License
Agreement constitutes the entire agreement between Licensee and Licensor with
respect to the subject matter contained herein and in the License Agreement;
and it shall not be amended, altered, or changed except by a written agreement
signed by the parties hereto.
5. Notices. All notices, requests, demands and other communications
under this Agreement shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the third day after mailing if mailed to the party to whom notice is to be
given, by first-class mail, registered or certified, or overnight delivery by
federal express or other guaranteed overnight delivery service postage
pre-paid, addressed as follows:
To Licensee: Xxxxxxxx Foods of Distinction
00000 Xxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
To Licensor: Swiss American Sausage Co.
000 X'Xxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxx Arena, President
Either party may change such party's address for purposes of this Section
4 by giving the other party written notice of the new address in the manner
set forth above.
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6. Governing Law. This Agreement shall be subject to and be governed
by the laws of the State of California.
7. Full Force and Effect. In all other respects, the License
Agreement remains in full force and effect.
IN WITNESS WHEREOF the parties hereto have executed this License
Agreement as of the date first written above.
LICENSOR: LICENSEE:
XXXXXXXX FOODS OF DISTINCTION, SWISS AMERICAN SAUSAGE CO.
a Colorado corporation a division of Provena Foods Inc., a
California corporation
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxx Arena
Its: President Its: President
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EXHIBIT B
LICENSE FEES
The License Fee shall be payable as follows:
1. The License Fee shall be $566,828 plus a fee of equal to five percent
(5%) per annum (compounded monthly) on such amount as remains outstanding
until the entire aggregate amount of the License Fee is paid in full in
accordance with paragraph 2 below.
2. The License Fee shall be payable in monthly installments by no later
than the 10th day of each month, in an amount equal to the number of pounds of
product purchased by Licensor from Licensee pursuant to the Manufacturing
Agreement, during the previous month, multiplied by $0.05. Licensor and
Licensee agree to review, and possibly modify, the methodology for determining
the amount of the monthly installment payment every six months, commencing
July 1, 2002.
